M/S Sachdeva Industries vs Union Of India
2008 Latest Caselaw 1958 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  CS(OS) 1700A/1996


%                                  Date of decision: 05.11.2008

M/S SACHDEVA INDUSTRIES                           .......       Plaintiff
                      Through: Mr Digvijay Rai, Advocate

                                  Versus

UNION OF INDIA                                      ....... Defendant
                     Through: Ms Preeti Dalal, Proxy counsel for Ms
                     Maneesha Dhir, Advocate.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may           No
      be allowed to see the judgment?

2.    To be referred to the reporter or not?          No

3.    Whether the judgment should be reported         No
      in the Digest?


RAJIV SAHAI ENDLAW, J (ORAL)


1.    Objections to the arbitral award dated 4th June, 1996 of Shri

T.K. Sil, Director (Computer) of the Calcutta Telephones have been

preferred under the Arbitration Act, 1940.



2.    The counsel for the plaintiff/objector has argued that the

award is based on conjunctures and surmises and is illogical.

Reliance in this regard is placed on the expressions used in the

award of the arbitrator being "surprised" and of the certain things

being "felt" by the arbitrator.    It is argued that the dispute before

the arbitrator was with respect to the date on the basis of which the

price of goods supplied by the plaintiff to the defendant was to be

calculated.


CS(OS)1700A/1996                                            Page No 1 of 6
 3.    The purchase order dated 11th January, 1989 was placed by the

defendant on the plaintiff pursuant to the tender submitted by the

plaintiff and pre-tender negotiations are also claimed by the plaintiff.

The said purchase order, it is not in dispute, was unequivocally

accepted by the plaintiff. In the column "delivery schedule" the

purchase order provided that the supply of stores must be completed

on or before 10th December, 1989.             In the column "special

instructions", in the purchase order, it was stated "supply is to

commence at the rate of 3000 kilo meters per month after two

months from the date of issue of this PO and be completed by

10.12.1989". The counsel for the plaintiff has also drawn attention

to clauses 6 and 14.4 of annexure A to the purchase order. In clause

6.3 it is provided that the purchaser i.e., the defendant reserves the

right to regulate the supplies within the scheduled delivery date;

that the purchaser can demand the maximum rate of supplies as

quoted in the tender offer or specify a lower rate of supply - such

instructions shall be issued as and when required in the form of

amendment to the purchase order.



4.    Clause 14.4 provides that for applying the price variation

formula, the price of the raw material prevailing as on 30 days

before the date of offer of stores to the inspecting authority will be

taken into account.



5.    It is the case of the plaintiff that the officials of the defendant,

in the negotiations prior to the purchase order had impressed upon

the plaintiff to commence the supplies immediately after the placing

of the purchase order and to waive the "lead period" of two months

for commencing the supplies which was provided for in the tender


CS(OS)1700A/1996                                              Page No 2 of 6
 submitted by the plaintiff. The counsel for the plaintiff has, in this

regard, invited the attention to the letter dated 2nd September, 1988

of the plaintiff to the defendant in the arbitral record, wherein the

plaintiff had assured the defendant that the plaintiff will commence

the supplies within a week after receipt of the purchase order. It is

the case of the plaintiff that the plaintiff had, in fact, offered to

commence the supplies on 11th January, 1989 itself. It is further the

case of the plaintiff that the defendant, however, vide communication

dated 12th January, 1989, intimated to the plaintiff that the defendant

was willing to take the supplies even during the lead period but

further imposed a condition that no supplies and test call shall be

accepted before 27th January, 1989.



6.    On the basis of the aforesaid, the plaintiff made a claim for

price variation on the price of raw materials 30 days prior to 11 th

January, 1989 while the defendant calculated the price on the basis

of rate prevailing 30 days prior to 27th January, 1989.



7.    The arbitrator has found the respondent justified in calculating

the price on the basis of rates prevailing 30 days prior to 27 th

January, 1989 and not found the plaintiff entitled to price on the

basis of raw material prices, prevailing 30 days prior to 11 th January,

1989. While doing so the arbitrator has expressed surprise that the

plaintiff was ready with the supplies of a huge quantity on the date of

placing of the purchase order itself and to which expression,

objection has been taken by the plaintiff. The counsel for the

plaintiff has, during the arguments, also invited attention to the

communications addressed by the Additional Secretary of the

defendant itself to the other officials of the defendant advising

CS(OS)1700A/1996 Page No 3 of 6 against the embargo of supplies before 27th January, 1989. It has

further been argued that no such embargo was placed on other

suppliers on whom purchase orders were placed pursuant to the

same tender. The plaintiff has also filed before the arbitrator various

communications addressed by the plaintiff objecting to the defendant

not taking the supplies before 27th January, 1989.

8. I do not find the arbitrator to have misconducted himself in any

manner whatsoever and do not find any error on the face of the

award and also do not find the award to be contrary to law or public

policy. Even though the purchase order fixed a date for completion

of supplies but the same has to be read in entirety. Under clause

6.3, the defendant, as the purchaser, was entitled to demand a lower

rate of supply. The defendant, vide its communication dated 12th

January, 1989 (supra) though not bound to accept supplies for two

months w.e.f. 11th January, 1989, indicated its willingness to accept

supplies after 27th January, 1989. The plaintiff in terms of the

purchase order could not compel the defendant to accept supplies

for two months from the date of issuance thereof. In the

circumstances, nothing wrong can be found with the finding of the

arbitrator of the defendant being not liable to accept supplies before

27th January, 1989 irrespective of the offer of the plaintiff. The award

is in consonance with the purchase order.

9. The counsel for the plaintiff, in rejoinder, also urged that the

arbitrator has not dealt with the claims No.1 and 2 as per the

statement of claim of the plaintiff. The claim No.1 is for unpaid bills

No.1127 and 1127A for Rs 5,60,720.80 and claim No.2 is for interest

thereon. It is admitted that the said bills were for the price variation

CS(OS)1700A/1996 Page No 4 of 6 which have been adjudicated by the arbitrator and the objections

with respect whereto has not been found tenable. It is, however,

stated that the said bills also included the amounts towards Central

Excise duties, sales tax etc which it is claimed were payable as per

actuals by the defendant to the plaintiff. It was also contended by

the counsel for the plaintiff that claim No.6 for loss of profit of 25%

on additional order has also not been adjudicated by the arbitrator.

However, the counsel for the plaintiff agrees that the defendant

under the terms of the contract was entitled to reduce the quantity

ordered. It is urged that, however, in this respect also it is the

plaintiff only who has been singled out. Upon it being pointed out

that the arguments of victimization, of arbitrariness, cannot be gone

into in these proceedings, the counsel has fairly stated that he does

not press non-adjudication of claim No.6 but seeks appointment of an

arbitrator to adjudicate the claims on account of excise duty, sale tax

etc. However, no such argument was made by the counsel for the

plaintiff in the opening and a perusal of the application under

Section 14 or the objections filed under Sections 30 and 33 filed by

the plaintiff also does not find any reference to the same. The

counsel for the plaintiff has argued that the entire award has been

challenged. In my view, the objections have to be specific. The

plaintiff/objector ought to have, at least, stated that all its claims

have not been adjudicated. In the circumstances, after a lapse of

more than 12 years of the pendency of this objection, I do not find it

a fit case to direct the defendant to appoint an arbitrator to

adjudicate the said claims. It is otherwise also the settled legal

position under the 1940 Act that the claims /counter claims which

are not allowed are deemed to have been allowed. The plaintiff

shall, however, be at liberty to approach the defendant for the

CS(OS)1700A/1996 Page No 5 of 6 unpaid amounts, if any, and the defendant to consider the said

request of the plaintiff. The objections are, therefore, dismissed,

however with no order as to costs.

10. The award is made rule of the court and judgment in terms

thereof is pronounced. Decree sheet be drawn up.

                                     RAJIV SAHAI ENDLAW,J
November 05, 2008
M




CS(OS)1700A/1996                                          Page No 6 of 6